Warning on green hedge fund managers

The phenomenal growth in Asian hedge funds over the past 18 months has been accompanied by a rise in inexperienced managers only in it for the short term, a leading manager has warned.

Kier Boley, head of GAM's Asia-Pacific multi-manager group, said there were now more than 650 Asia-focused hedge funds - including Japan and Australia - representing a more than 20 per cent increase from over a year ago.

In total, there was about US$120 billion under management, representing 10 per cent of the entire hedge fund industry assets. The number of fund managers had increased from about 20 in the mid 1990s to over 620.

While the industry welcomed the upsurge, Mr Boley said not all fund managers had the experience or conviction to maximise the full potential the hedge fund industry presents.

'Some managers are purely in the industry for the short term and I would not want them running the type of funds we wish to see in our portfolio,' London-based Mr Boley said.

Large sums of money from the US and Europe, mainly from institutional investors, had flowed into both the funds of new managers and well-established hedge fund firms. However, Mr Boley believes a high proportion of this money is performance-chasing and could be moved at a moments notice, leading to a significant adjustment of inflows.

Asian hedge funds have produced better returns than hedge funds in other parts of the world over the past year, attracting big investors. Mr Boley, who was in Hong Kong to meet with hedge fund managers, said he expected to see more growth as an increasing number of local investors turned to hedge funds.